Davis Contractors Ltd v Fareham Urban District Council UKHL 3 is an English contract law case concerned with the alleged frustration of an agreement.
Facts Davis Contractors agreed with Fareham UDC to build 78 houses over eight months for £92,425. It ended up taking 22 months because Davis was short of labour and materials and cost £115,223. Davis submitted that the contract was frustrated and void and therefore they were entitled to payment on a quantum meruit basis for the value of work done.
Judgment The arbitrator who first dealt with Davis Contractors' claim held that "the footing of the contract was removed" and therefore the original contract had come to an end.Lord Reid in AC 696, 721
On referral to the House of Lords, the Lords held that although the performance of the contract had become more onerous, it was not frustrated. Lord Reid referred to the "artificiality" involved in saying that frustration was an implied term, because people do not anticipate unforeseeable events. Instead, he wrote the following: AC 696, 721
Lord Radcliffe concurred with the result: AC 696, 728-9
Another argument which failed was that an express term was incorporated that the agreed price was binding only if there were in fact adequate supplies of labour and materials. Viscount Simonds noted that the contractors' initial proposal had included a statement to this effect but that subsequent negotiations and the resulting formal agreement did not retain this wording. AC 696
Australian law Lord Radcliffe's test was approved by the High Court of Australia in Codelfa Construction Pty Ltd v State Rail Authority of NSW..
See also English contract law Frustration in English law
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